May 8 (Bloomberg) -- Copper prices, which gained the most
in a week yesterday, may climb to $4.20 a pound for the first
time since September, according to technical analysis by Paul
Kavanaugh, a senior trader at PFGBest.

The futures contract for July delivery will rise 11 percent
if prices on the Comex in New York top the 50 percent Fibonacci
retracement level of $3.803 within a couple of trading sessions,
Kavanaugh said in a telephone interview yesterday. The metal
closed yesterday at $3.7735, rising 1.4 percent, the biggest
gain since April 26. Prices still are down 1.5 percent in May,
heading for the biggest monthly decline of the year.

“It is encouraging to see that copper is trying to claw
back,” Kavanaugh said, noting that the 100 percent Fibonacci
retracement level is $4.526. “In the short term, we will see
some strength.”

Copper prices still are up 9.8 percent this year, partly on
expectations that global demand will exceed mine output. PNB
Paribas increased its forecast for a production deficit in 2012
to 400,000 metric tons on May 4 from an earlier estimate of
300,000 tons.

In technical analysis, investors and analysts study charts
of trading patterns and prices to predict changes in a security,
commodity, currency or index.

Fibonacci analysis is based on the theory that prices tend
to drop or climb by certain percentages after reaching a high or
low. A break above resistance or below support indicates a
commodity may move to the next level. The difference between
high and low points on charts is divided into retracement levels
based on ratios that were described by 13th century
mathematician Leonardo of Pisa, known as Fibonacci, and
correspond to proportions found in nature.